Boulder Valley's online learning director was arrested Tuesday on suspicion of theft for allegedly using nearly $6,000 in school district money to fund his own online learning start-up company.

Kurt LeVasseur, 47, who is on administrative leave pending the completion of the district's internal investigation, has worked for Boulder Valley for 17 years. District officials first noticed a potential problem in June.

"The district became concerned that funds may not have been handled correctly and turned the matter over to the district attorney," Boulder Valley spokesman Briggs Gamblin said.

Urania Judith Bauernsschmidt (Boulder County Sheriff)

Also arrested Tuesday was Urania Judith Bauernschmidt, who partnered with LeVasseur to create the start-up, eLearning Network of Colorado. Bauernschmidt, who previously worked for the Colorado Charter School Institute, was arrested on suspicion of attempted theft.

The company was developed out of a consortium of 46 Colorado school districts to share online learning best practices, training and content, district officials told investigators.

Boulder Valley originally agreed to share content with the consortium but reversed that decision when it moved toward becoming a for-profit consulting company, officials said.

According to an arrest affidavit, district officials told police that LeVasseur in January used $5,684 of district money to pay for eLearning Network's website design and a hosting subscription service.

In May, he signed a $6,000 contract with Bauernschmidt, authorizing her to provide consulting and mentoring to a yet-to-be-hired new principal at Boulder Universal. District officials told police he wasn't authorized to enter into contracts with outside providers.

The district stopped payment on the check after determining it wasn't an authorized transaction, according to the affidavit. In June, a district employee reported the invoice for the website design as suspicious.

LeVasseur told district officials that he authorized the website design with the understanding that Boulder Valley would be paid back using grant money awarded to eLearning Network by the Colorado Legacy Foundation. The $20,000 grant was awarded in late February, with the money expected to be given to eLearning Network on June 1.

He told investigators that the grant money "didn't come through in time," but the plan remained to pay back the district. He also said that he had not financially benefited and noted that he doesn't receive a paycheck from eLearning Network, though he told investigators he eventually hoped to leave Boulder Valley and work full-time at eLearning Network.

"I was really trying to get this thing, because I knew it would benefit Boulder Valley in the long run and that's my main end," he told investigators, according to the affidavit.

Bauernschmidt told investigators that eLearning Network of Colorado didn't have a dedicated office or revenue and was preparing to apply as a nonprofit agency. She also told investigators that she thought Boulder Valley was "in full support" of eLearning Network and that all the work done was "above board."

LeVasseur could not be reached for comment Tuesday. Bauernschmidt declined to comment when contacted at her home.

Both have posted $200 bond in the case.

Boulder Valley officials said Diana Gamboa will serve as interim online learning director, adding that students and parents won't see any disruptions to the operations of Boulder Universal, the district's online high school.